Cryptocurrency exchanges are experiencing the toughest test about withdraw,  following FTX’s liquidity crunch that has sent shockwaves throughout the industry.

Binance First to Publishes Proof of Reserves. Whereafter, Many top crypto exchanges are now scrambling to publicly publish their fund reserves. On Wednesday alone, nine exchanges – Gate.io, KuCoin, Poloniex, Bitget, Huobi, OKX, BitMEX, Deribit and Bybit – separately issued statements that they would publish their Merkle tree reserve certificates to increase transparency.

One method or structure used to increase transaction verification transparency is the Merkle Tree. Exchanges for cryptocurrencies must be transparent about the user funds they hold. Users can use the method to examine and confirm that the exchange actually holds the funds.

In essence, this involves the crypto exchange giving the auditor the data. The auditor then creates the Merkle Tree using the information from the user balances. After the calculation, the auditor verifies and publishes the Merkle Tree and root hashes.

The Merkle Tree leaves will be saved as a plain text file and made available to the public on GitHub. Customers will be able to personally check their own balances thanks to this.

A few hours later after CZ post, OKX, one of the top crypto exchanges announced that it will publish its merkle-tree proof-of-reserves within 30 days. 

The exchange official twitter said that, "It's critical for all major crypto venues to publicly share their auditable merkle tree proof-of-reserves or POF. We plan to publish ours in the coming weeks (within 30 days). This is an important step to establish a baseline trust in the industry."

Gate.io has made its Merkle Tree Proof of Reserves solution open-source. Announced by Gate.io's Founder and CEO, Dr. Lin Han today.As outlined in a report from Armanino LLP, Gate.io holds an excess of BTC and ETH reserves at 108% and 104%, respectively.

Johnny, the CEO of KuCoin said on Twitter that, the safety of users' funds is the top priority at KuCoin. He also expressed his sympathy for people who the FTX situation has hurt.

According to his tweet, a Merkle tree proof-of-reserves will be released in 1 month.

Meanwhile, Justin Sun re-tweet from CZ and said Poloniex and HuobiGlobal both have done merkle-tree proof-of-reserves before. Huobi actually just finished it about one month ago. Then he agreed the importance of Merkle-tree proof-of-reserves for exchange industry and transparency.

Zhou also stressed Bybit's stance towards customer funds to Bloomberg.  "Bybit is NOT a bank, we are a custodian of our customers' funds.  We do not use those funds for any other purpose!  Bybit can guarantee that all clients assets are stored in one-to-one liquidity held in custody - available in full, on request, and without delay if requested."

Furthermore, other top crypto exchanges like BitMEX, Deribit and Bitget also announced to have Merkle tree proof of reserves. All of these exchanges are working on Proof of Reserve sharing and will soon share one.

Many top crypto exchanges announced to use Merkle Tree certificate in order to gain more trust and avoid any speculation. Venturing a guess if FTX had announced Proof of Reserved, it would have not seen so much withdrawal and rumors because Proof of Reserve ensures transparency and trust. FTT lost 70% of its worth within a few days.